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External Capital Structures and Oil Price Volatility

Author

Listed:
  • John D. Burger
  • Alessandro Rebucci
  • Francis E. Warnock
  • Veronica Cacdac Warnock

Abstract

This paper assesses the extent to which a country’s external capital structure can aid in mitigating the macroeconomic impact of oil price shocks. Two Caribbean economies highly vulnerable to oil price shocks are considered: an oil importer (Jamaica) and an oil exporter (Trinidad and Tobago). From a risk-sharing perspective, a desirable external capital structure is one that, through international capital gains and losses, helps offset responses of the current account balance to external shocks. It is found that both countries could alter their international portfolio to provide a better buffer against such shocks.

Suggested Citation

  • John D. Burger & Alessandro Rebucci & Francis E. Warnock & Veronica Cacdac Warnock, 2010. "External Capital Structures and Oil Price Volatility," Research Department Publications 4667, Inter-American Development Bank, Research Department.
    • Handle: RePEc:idb:wpaper:4667
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    References listed on IDEAS

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    Cited by:

    1. Kirsten Roach, 2014. "A Structural Analysis of Oil Price Shocks on the Jamaican Macroeconomy," Monetaria, Centro de Estudios Monetarios Latinoamericanos, CEMLA, vol. 0(2), pages 217-252, July-Dece.
    2. Kirsten Roach, 2014. "Un análisis estructural de los choques de precios del petróleo en la macroeconomía de Jamaica," Monetaria, Centro de Estudios Monetarios Latinoamericanos, CEMLA, vol. 0(2), pages 233-271, julio-dic.

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    More about this item

    Keywords

    Hedging; Oil; Foreign assets and liabilities; International portfolios;
    All these keywords.

    JEL classification:

    • F3 - International Economics - - International Finance
    • G1 - Financial Economics - - General Financial Markets

    NEP fields

    This paper has been announced in the following NEP Reports:

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